Here we are, lockdown is now a reality.

South Africa had a terrible week last week, from lockdown to junk status. This is definitely not how we thought the 3rd month of 2020 will look like. The Government declared a National State of Disaster and it changed everything for all South Africans.

As our slogan goes, “Yes, we’re accountants. But we are not just accountants, we are business partners.” We are here to assist you as a business owner or manager through these unprecedented times. The Government has provided several business relief programs from cash, taxes and payroll related payments. We will be here to assist as far as possible.        

UNEMPLOYMENT INSURANCE FUND (UIF)

This is a summary from the Department of Labour:

1. Easy-Aid Guide for Employers for UIF Benefits:

  • The Minister of Employment and Labour has announced measures that the Department will put in place as required under the current special circumstance relating to the Corona virus (COVID-19) and its impact on UIF contributors.
  • The Unemployment Insurance Fund will compensate affected workers through a new “National Disaster Benefit” and its existing Illness, Reduced Work Time and Unemployment benefits.

2. National Disaster Benefit:

  • The employer may decide, as a direct result from the current Corona virus (COVID-19) pandemic to close their business for a period and send employees home. This constitutes a temporary lay-off. If the employer cannot pay his employees for this period, the employer can apply for the “National Disaster Benefit” from the UIF.
  • This benefit will be de-linked from the UIF’s normal benefit structure and therefore the normal rule that for every 4 days worked the employee accumulated 1 credit day and maximum credit days payable is 365 for every 4 completed years will not apply.
  • This benefit will be at a flat rate equal to the minimum wage (R3 500) per employee for the duration of the shutdown or a maximum period of three months, whichever period is the shortest.
  • If an employee is ill, temporary lay-off or unemployed for longer than three months, the normal UIF benefits as explained below will apply

3. Required Forms And Documents:

  • UI19 and UI2.7 (completed by Employer)
  • UI2.1 (application form)
  • UI2.8 (bank form completed by the bank)
  • A letter from the Employer confirming company shutdown or employee’s “temporary lay-off” is due to the Corona Virus
  • Copy of employee’s ID document

All completed documents should be submitted to Johannesburg.BCP@labour.gov.za

Apply for Covid-19 TEMPORARY EMPLOYEE RELIEF SCHEME (TERS) by sending an email with application details and reasons to covid19ters@labour.gov.za

TAX BENEFITS

  1. ETI – SARS will now pay out Employment Tax Incentives on a monthly basis instead of twice a year. This is to cash in the hands of compliant employers. There will be a provision of R500 per employeeearing below R6,500 per month for the next four months. This will encourage employers to employ young workers during this time.
  • PAYE – If your business has a turnover of less than R50 million per year you will be allowed to delay 20% of your PAYE payments over the next four months.

PROVISIONAL TAX – A portion of your provisional tax payment can also be deferred without any penalties or interest over the next 6 months.

Please note that this is only a delay of the relevant employees’ tax and provisional tax obligations and not a reduction.

  • UIF & SDL – Possible temporary reductions of employer and employee contributions to the Unemployment Insurance Fund and possible temporary reduction of employer contributions to the Skills Development Fund are being considered.

SMALL BUSINESS DEVELOPMENT

Debt Relief Fund to help alleviate the economic impact of the coronavirus on small businesses in South Africa is due to come into operation on Tuesday 24 March 2020.

All small, micro and medium enterprises (SMMEs) may apply for relief on existing debts and payments. In order to be eligible, all applicants will be required to show an impact, or potential impact, of the virus on their business. This facility will also assist entities to acquire raw material, pay labour and operational costs.

Registration is open on their website at http://www.smmesa.gov.za/ for small and medium-sized businesses that require help during the Coronavirus crisis. To qualify:

  • Business must be 100% owned by South African Citizens.
  • Business must be registered and compliant with SARS and UIF.
  • Employees must be 70% South Africans.

Should you have any questions regarding any of these, please contact your account manager.